Tuesday, March 24, 2009

Probably the only thing New York cab drivers have in common with city bankers is that both are fighting greater regulation. For the bankers, of course, that means a bailout. But the cabbies just get crushed. While one year drivers are coughing up fees for credit card fares, in the next they subsidize the mayor’s hybrid cab decree. They were not spared even post 9/11, when they lost an estimated 80% of their income and fought hard for disaster assistance. The lobbyist-infested Taxi and Limousine Commission isn’t about to help, nor are fleet owners or the predominantly white ridership. Who is? It takes Biju Mathew to get the drivers, three quarters of whom are Third World immigrants, to fight for their interests.

Mathew, 45, is immigrant labor’s unlikely champion. A professor of information systems at Rider University, he emigrated from India himself in 1989 for a doctorate at the University of Pittsburgh. He didn’t become an obscure academic. The labor movement in America became his lab. He emerged in recent years as a key New York taxi organizer, fighting powerful vested interests. “Intellectuals should function in the domain of political work and not remain isolated in academics,” he says. The Alliance, which Mathew helped found, buzzes with activity. More than 11,000 members hail from Egypt, Senegal, Pakistan, Bangladesh, India, Haiti, Tibet and Nepal. Drivers register complaints about cancelled licenses, racist bosses, and harassment by the Taxi Commission. Mathew’s book, Taxi! Cabs and Capitalism in New York City, is showcased like a trophy.

The current fight over Mayor Michael Bloomberg’s “green taxis” is illustrative. Last year, the mayor called for New York cabs to be hybrids by 2012. But in October, a judge halted the greening. Today, only 10% of the city’s 13,000 cabs are hybrids. The commission claims the hybrids will save drivers nearly $5,000 in fuel annually. But Mathew thinks it’s the mayor’s ploy to be seen as conscientious. “With plummeting energy costs and high maintenance costs, hybrid taxis do not immediately make sense,” he says. Taxis contribute only 4% of all ground transportation carbon dioxide emissions, the mayor’s report says. The real action is for fleet owners who can now charge higher leases. More than 85% of cab drivers lease their taxis. So, even though hybrid medallions are cheaper, driver costs are higher. After lease costs and gas, many drivers can barely make ends meet. Not everyone sees it this way. Take Evgeny Friedman, fleet manager of New York Taxi Club and its 2,000 drivers. In 2004, Friedman bought half the hybrid medallions the City Council sold. Hybridization will generate for him $2,000 per year per vehicle. Little wonder the lobbyist and commission member champions its success. Friedman did not respond to repeated email and phone queries. Mathew feels the commission can instead look at more pertinent issues for the taxi industry such as health insurance for taxi drivers.

Mathew takes politics seriously, and he doesn’t shy from controversy. Two years ago, Stanford University barred him from speaking due to his “links” with the Communist Party (Marxist) of India. The party is criticized for violently crushing resistance to land acquisition. A few years ago, Mathew exposed nationalist Indian Americans who funded right-wing Indian extremists who murdered Muslims in 2002.

To be sure, under Mathew the alliance has had some success. Drivers walked away with 68% of 2004’s fare increase. Then, the alliance joined the New York State Central Labor Council in 2007, the first independent union to do so. Mathew calls that group “tremendously progressive.” The alliance is now fighting the 5% credit-card fare surcharge. "In this system, the driver loses complete control over the process. Every middleman in the process gets a commission," Mathew says.

With laissez faire economic liberalism under question, Mathew says that workers must ask themselves if they really need business-cycle booms and busts anymore. The aim: Not just better wages, but “worker autonomy,” as he puts it, like a true activist.

The Guardian was gagged by Barclays last week for publishing internal tax documents that mapped out how the bank set up front companies to avoid tax liability worth hundreds of pounds. The bank managed to get an emergency temporary injunction from a judge to prohibit the newspaper from publishing the internal memos that allowed the bank’s structured capital markets wing to invest $16 billion in to US loans in 2007. It was originally leaked to the Liberal Democrats' deputy leader, Vince Cable. Offshore tax havens like Cayman Islands, benefits generated by Luxembourg subsidiaries were all a part of the plan.

Alluding to the tax avoidance schemes, a whistleblower said thus, “Through the use of lawyers and client confidentiality SCM regularly circumvents these rules, just one example of why Her Majesty's Revenue & Customs HMRC will never, in its current state, be up to the job of combating this business,” as reported in The Guardian.

Funnily, this came in just as chancellor Alistair Darling was emphasizing the importance of banks complying with tax requirements! The Guardian lawyer was apparently woken up in the wee hours on Tuesday.

Barclays argued that “documents were the property of Barclays and could only have been leaked by someone who acquired them wrongfully and in breach of confidentiality agreements.” Following the ban the newspaper is prohibited from giving information about the access to the documents. Further, it cannot encourage others to seek the information.

The newspaper reported: “Justice Blake rejected the paper's argument that in the public ­interest, it was entitled to publish the Lib Dems' documents in full. "They have no human right to do so," he said. It was true there was a strong public interest in how the banks went about their business, and the ­subject of their tax avoidance was “acutely topical".”

It was argued that since these documents contained legal advice which meant high protection from courts, the publication was not allowed to carry them although there was strong public and political interest.

Ostensibly, the bank’s counterparties – banks and other FIs could do without publicity in their involvement in these loan transactions, Barclays said.

The case has thrown up questions about the level of detail necessary for “meaningful public debate”. Read here for more.

Saturday, March 21, 2009

Touted as the most ambitious bill for labor unions in the last three decades, the Employee Free Choice Act has generated millions of dollars in lobbying by either sides of the political aisle to block or push the controversial legislation. Common to both sides is the swell in contributions from non-profits groups often guised as soft money

Seen as a big benefit to collective bargaining in the United States, the bill also known as ‘card-check’ seeks to empower employees to form unions. It will give authority to federal arbitrators to intervene in contract disputes and impose settlements. As a result enforcement of labor laws, majority sign-up and contract negotiations are expected to improve. Most importantly, it will allow unionists to bypass the secret ballot system and instead push for signed petition cards from the workers. Employers favor the secret ballot system since it gives greater power over the way workers are organized. According to one estimate less than 8% of private sector workers are union members.

Labor unions who backed President Obama in his campaign, want him to push for it.While the provisions in the legislation do not eliminate the secret ballot system, lobbyists in Corporate America believe that it will essentially eliminate this choice. The stakes are high since the ballot is associated with political offices. First introduced in 2007, the bill was killed by a silent Republican filibuster, although Democrats controlled both the House and the Senate, with a one seat margin in the latter.

According to the Campaign Finance Institute (CFI), an affiliate of George Washington University, the US Chamber of Commerce spent $36 million to oppose the bill in 2008. It planned to spend $10 million more, following the November ‘08 election. The Employee Freedom Action Committee (EFAC), one of the most conspicuous opponents spent $20 million on last year’s Presidential election.

Similarly, American Rights at Work, an advocacy group for labor unions spent $5 million to garner support for the bill. The Service Employees International Union spent more than $1 million in campaign spending, according to the CFI report. Brendan Glavin who contributed to the report said that the authors had to consolidate data from FEC and IRS filings to arrive at these estimates. The CFI study notes the contributions of such groups to 527s and other committees has tripled since 2004.

Current regulations of the Federal Election Commission (FEC) do not require 501(c) nonprofit groups such as the EFAC, to disclose its expenditure related to campaign finance, unlike political action committees that are mandated to file. Also, section 527 political organizations that have the “primary function” of influencing elections and appointments to public office, are required to have greater disclosures and file with the Internal Revenue Service (IRS).

As per IRS rules, certain categories of 501 groups may engage in an unlimited amount of lobbying, provided that the lobbying is related to the organization's ‘exempt purpose’. A labor union is classified as 501 c (4). These groups can influence elections and appointments to public office as long as it is not their ‘primary activity’. Further they can gather limited individual contributions even as they “expressly advocate” the election of a candidate, apart from contributing to 527 groups as well. “The close integration of the soft and hard money systems raises the question of whether the former undermines the anti-corruption effects of the latter,” the CFI report said.

According to the American Rights at Work, in 2004, there were 1,756 corporate PACs, more than five times the number of labor PACs, and these corporate PACs spent more than twice as much as labor PACs. Further, the website claims that as per FEC data, businesses spent nearly 25 times the amount spent by labor in the 2004 political cycle.

But business groups question if employees really want to form unions. The Employee Freedom Action Committee (EFCA) alleges that more than 80% of the 3000 workers it spoke to do not want to be unionized. J Justin Wilson, Managing Director, Employee Freedom Action Committee, said “This legislation will usher in wage price controls and involve a federal arbitrator who could interfere with businesses. The political winds are blowing against the bill. The unions have fewer sponsors than they had in 2007.”

Polls by pro-legislation groups such as the AFL CIO say that 60 million workers want to be unionized, claiming it is the only way for a middle class resurgence in America. Alison Omens, media outreach specialist, for the American Federation of Labor and Congress of Industrial Organizations, (AFL-CIO) claimed, “There has been a corporate assault by big business groups. Reportedly $200 million has been spent by Corporate America to defeat this legislation. Our focus is to shift the power to decide from the employers to the workers without being fired or coerced. ”

More than a dozen leading economists including Jeffrey D. Sachs and Joseph E. Stiglitz, Columbia University have lent support to the bill. Jagdish N Bhagwati, an economist who also teaches at Columbia University, said, “I supported the legislation, though I am opposed to the card-check provisions as I firmly believe in secret ballots, because I believe that the AFL-CIO has always tried to externalize the issue of stagnant wages by blaming it on trade with the poor countries whereas this legislation supports the rival, and correct, proposition that the stagnation is caused by weak unions and falling membership: so that the cause is domestic instead."

He further added, "The former approach leads to protectionism against the poor countries which is both based on erroneous analysis and is deplorable, especially for Democrats who like to think that they are cosmopolitan, altruistic and care about the poor countries whereas the Republicans are self-serving devils with horns! In fact, not merely has the AFL-CIO insisted, therefore, on inserting labor standards into trade treaties, the sole purpose being to raise the cost of production abroad in the poor countries whose competition they dread --- this is what we economists call "export protectionism", but they have also been pushing for Buy America provisions: all of which is clear old-fashioned import protectionism.”

It is positions such as this one, which makes it a close race to get the requisite 60 votes in the Senate to stop a Republican filibuster. Both sides will ensure that enough money flows for this bill – as some commentators dubbed it – one of ‘generational importance’, when it is taken up by the Congress later in the year. Unlike before, things are different in the Congress of 2009.

Ends

Also read Professor Jagdish Bhagwati's argument on the EFCA in an article for The New Republic.

Correction: J Justin Wilson, Managing Director, Employee Freedom Action Committee has brought this to attention: The 501(c) organizations involvement was created in a recent supreme court decision as a fundamental right of a (c)4 advocacy organization. Also, unions are 501(c)5 organization, and the union cannot explicitly endorse candidates, only the union's PAC.

Sunday, March 15, 2009

This is one of my pet topics. Apart from an undeniable “connection” to Buddhism, Tibet is my dream destination. But that aside, my pet angst is when people separate abuses of human rights from issues of greater economic importance like financial crises, currency revaluation, bilateral trade and climate change. Secy. of State Hillary Clinton has rightly been under fire for prioritizing these pressing issues with China, while looking the other way on human rights abuses in the Middle Kingdom when she was in China last month.

I wonder what the inflection point is, when revenues, deficits and ‘cooperation’ transcend torture and abuse of fundamental rights to speech, expression among others. But this self-created dilemma has to be resolved soon. It is like looking at half the problem and seeking solutions.

China’s oppression of the Chinese within its boundaries is one, and its might outside is another. Last week, Tibet marked the one year anniversary of the unrest in Lhasa and other regions exactly a year ago. Chinese personnel open fired on monks who had gathered to mark the 49th year of a crushed rebellion against communist rule. Protests and marches erupted in more than 100 locations in parts of Sichuan, Gansu and Qinghai provinces.

Around this time, 50 years ago Dalai Lama fled from Tibet and established his government in exile. Amidst the brouhaha over the success and failure of the Tibetan movement, one of my fiery friends drew attention to this. And this is what he had said, “It comes from the Chinese, so a lot of it's one-sided propaganda. Yet, if you sift the grain from the chaff, you will probably see that the pre-Chinese Tibetan order, which much of the Tibetan movement claims to speak on behalf of, was not exactly a repository of virtues.” Worth pondering.

In the New York Times story, Matt Zerdan a student recounts how he felt violated to discover that his professor, a paid consultant to drug companies was not providing accurate information to his students. That was four years ago. Last fall 40 students protested. The incident has blossomed into a full-blown movement with more than 200 Harvard Medical School students and faculty. Their mission: to expose and curtail corporate influence in classrooms and Harvard’s 17 affiliated teaching hospitals and institutes, the Times says.

It further cites a report where the American Medical Student Association, a national group that examines how medical schools control drug industry money, has rated Harvard an F grade. Further, under the school’s disclosure rules, about 1,600 of 8,900 professors and lecturers have reported to the dean that they or a family member had a financial interest in a business related to their teaching, research or clinical care. The reports show 149 with financial ties to Pfizer and 130 with Merck, the story says.

Schools are under pressure since their funds have lost enormous value in the recession. Although changes in conflict-of-interest policies are being drafted, companies fund several important initiatives in these schools.

Now, Senator Charles E. Grassley who has in the past spoken against conflicts of interest in medical research, has asked Pfizer to furnish information about payments to Harvard faculty.

This controversy will inevitably open a can of worms about autonomy of medical institutions and privacy in research. Doctors recount that many medical students are turning militantly “anti-pharma”. Read here for an interesting set of comments from various stakeholders.

Refer to my previous post on whether erosion of rights is a concern during a recession. The Economist does not seem to think so.

It says: “…It might not seem the best moment for the ragtag gang to make its stand….Surely the slump is not the time to reclaim liberties that were casually cancelled during the boom?” Sigh.

UK witnessed The Convention on Modern Liberty on Feb 28th to map state transgressions to nail down citizens with ID cards and databases. Like everything else, the event has been called both success and failure. Success because of the timing. The Guardian reports that the companies are increasing surveillance about pro-union workers. So is the talk of a police state just scare-mongering or more? And the convention was a failure for looking at “liberty” in narrow terms without linking to other social, cultural and economic rights.

Apparently we are heading towards a summer of rage – simultaneously in various parts of the world: from Russia to Iceland to Britain. In the Letter from Reykjavik, The New Yorker has an interesting story on how Icelanders are coming to terms with protests bang in the middle of frozen locales.

So authorities and powers that be are worried about containing this ‘wrath’. The Economist article concludes: (cannot resist the temptation to present it here): The credit crunch has shaken the kaleidoscope of British politics. Banks have been nationalised; ridiculed leaders have been lionised, then ridiculed again. It will doubtless have further unpredictable side effects—including, maybe, a creeping victory for the eccentrics. Perhaps rights and liberty will remain a marginal concern, which few in a pinched Britain have the time or inclination to worry about; yet it may be the price of restricting freedom that proves too high for politicians. Liberty could turn out to be one of the few things that prosper in the slump.

About Me

I am a reporter from New Delhi working in Switzerland. A graduate from New York University's Business and Economic Reporting program, I now work as a freelance business journalist. Also pursuing a masters in development studies in Geneva.
http://pritipatnaik.org/